VIEW: Tuesday saw Natwest Markets note that....>

EGBS: VIEW: Tuesday saw Natwest Markets note that they "expect the final version

of the (EU fiscal) agreement to be close to the French-German proposal."

However, they do "recognise that it is not sufficient, in itself, to backstop

debt sustainability in periphery... backstopping debt sustainability is such a

big job that it requires the ECB in the short term." Ultimately, they note that

"for periphery, this puts most of the near-term questions about finance &

political solidarity away for the foreseeable. Front-end periphery has

outperformed recently thanks to TLTRO-iii. Whilst there is still juice left in

that trade, we think extending further down the curve should offer more upside.

We target 160bp in 10y BTP/Bund spreads and 70bp in 10y SPGB/Bund spreads. We

stay short duration. This proposal will likely see hundreds of billions of EUR

in bond issuance from the EU, with much front-loaded into next year to compete

with German paper for investors, just as the Finanzagentur starts terming out

its 2020 spending. The level of political solidarity in this proposal should

also cut the break-up premium priced into bunds, which are now the most

expensive fixed income asset in the world."